Labour Court Reaffirms Distinction Between Misconduct and Poor Performance

Definitions:

-          Poor Work Performance: a form of incapacity where an employee fails to meet the required quality or quantity standards of their employment.

-          Misconduct: an employee’s fault-based violation of workplace rules, policies, procedures, or employment contract terms.

In the recent decision of Propay (Pty) Ltd v Stengel [2026] JR2841-23 (LC), the Labour Court once again emphasised the critical distinction between misconduct and poor performance in the workplace.

The matter concerned the dismissal of a senior employee for alleged gross negligence and dereliction of duty. However, on a closer examination of the facts, the Court found that the true issue was not misconduct, but rather the employee’s failure to meet required performance standards. This was particularly evident where the employee struggled to adapt to a newly implemented working methodology and required further support and training.

Importantly, the Court noted that while the employer relied on allegations of misconduct, there was no clear evidence of a breach of a rule, refusal to obey a lawful instruction, or any culpable wrongdoing. Instead, the evidence pointed to unmet expectations and inadequate performance outputs, which are indicative of incapacity rather than misconduct.

The Court reaffirmed that misconduct proceedings are fault-based, whereas poor performance or incapacity proceedings are no fault based. As such, employers must follow different processes depending on the nature of the issue. Critically, an employer cannot pursue both misconduct and poor performance based on the same set of facts. It must be one or the other.

The judgment also highlighted the employer’s failure to properly manage the employee’s performance. Despite recognising performance shortcomings, the employer did not implement structured performance management measures such as setting clear standards, providing guidance, or monitoring improvement over time.

Further undermining the fairness of the dismissal, the disciplinary chairperson had recommended a sanction of demotion. This indicated that the employment relationship had not irretrievably broken down. Nevertheless, the employer proceeded with dismissal.

Ultimately, the Labour Court upheld the arbitration award and found that the dismissal was both procedurally and substantively unfair. The employer’s review application was dismissed.

Key Takeaway for Employers

This judgment serves as an important reminder. Employers must correctly categorise employee issues from the outset. Mischaracterising poor performance as misconduct, or conflating the two, can render a dismissal unfair and expose employers to adverse findings at the CCMA or Labour Court.

As such, companies should consider implementing a detailed Code of Conduct that not only sets out the various forms of misconduct but also provides both employees and employers with a clear framework for how sanctions are to be addressed. This further equips employers with the necessary tools to properly guide and manage poor work performance, while ensuring that both procedural and substantive fairness are upheld at all times.

We at VST Attorneys are well positioned to assist both employers and employees with the implementation of, and adherence to, the above.